One of the companies that is dabbling with advertising on Twitter – even if Biz & co seem to be reluctant to do some serious testing of their own – is Ad.ly, an LA-based startup that launched about a month ago.

In essence, Ad.ly aims to link up high-profile advertisers with celebrities on Twitter and distribute links to marketing campaigns through the celebs’ tweet streams with full disclosure.

The model is pretty straightforward: the celebrity (or publisher) gets a lot of cash in return for a couple of messages that are under 140 characters, and Ad.ly takes its cut.

As my colleague Leena Rao wrote upon Ad.ly’s launch:

Each publisher sets the price of a Tweet campaign but Ad.ly will give the publisher a pricing suggestion based on variety of metrics. Ad.ly’s proprietary algorithm evaluates follower counts, authority, quality of Tweets and will help determine the Twitter’s value. And when I say that celebs get paid “handsomely,” I mean it. If a celeb has above a million followers, each Tweet gets in the five figures, with multiple Tweets about a product netting the celeb a six-figure reward (yes, for four Tweets!). Ad.ly takes a cut of what the celeb makes, but Rad wouldn’t reveal what the percentage is.

That’s a lot of money for tweets, so time will tell if it’s a sustainable model, if celebrities keep signing up and using the service and if Ad.ly will be able to pay their promised dues. But some investors are bullish on the potential, at least.

Yesterday, GRP Partners’ Mark Suster wrote an interesting blog post on the topic of VC seed funding. In the post, Suster reveals that GRP Partners, where he is a General Partner, has just closed a $500,000 seed round for Ad.ly and that he’d be interested in leading or joining follow-up VC financing rounds if the startup keeps performing well.

A couple of weeks ago, Ad.ly even hired a West Hollywood PR and marketing firm called Entertainment Fusion Group to be its ‘Agency of Record’; EFG will help the fledgling company with public relations and talent procurement. Since it’s deeply embedded in the entertainment industry, the firm should help Ad.ly get some exposure within the circle of movie stars and other celebrities.

So what gives? Has Ad.ly, with its focus on high-profile advertising partners and celeb Twitter users with a large number of followers, cracked the nut of Twitter advertising? Impossible to say without seeing some numbers, but it appears to be striking a chord or two.

Not that Ad.ly is the only one trying to capitalize on Twitter’s growth and celebrities’ massive audience. SponsoredTweets (from IZEA) does much of the same, and then there’s ExecTweets, a cooperation between Microsoft and Federated Media. Others, like Be-A-Magpie and Twittad, have their sights set on the long tail of Twitter.

Whether you think of it as stream pollution or an innovation social media monetization, Twitter advertising is here to stay, for better or worse. And you can rest assured many of these ad networks are going to run a profitable business way before Twitter does. The flip side of that coin is of course the fact that all of rely on the Twitter platform, so if they prosper or perish is partly Twitter’s call.

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In a comment to the post, Brandon McCormick says:

This is Brandon on the Facebook communications team. I wanted to chime in to make sure that our voice was part of this discussion and to clarify how we are addressing this issue.

We take click quality very seriously and have a series of measures in place to detect it. We have large volumes of data to analyze click patterns and can identify suspicious activity quickly.

Over the past few days, we have seen an increase in suspicious clicks. We have identified a solution which we have already begun to implement and expect will be completely rolled out by the end of today. In addition, we are identifying impacted accounts and will ensure that advertisers are credited appropriately.

Advertisers on WickedFire, where the original comments about click fraud are posted, are sure to be pleased. Although they may be wondering why it took attention from a blog to get Facebook to deal with the issue, which has been ongoing since at least May.

As an aside, Izea, the controversial (at best) pay per post advertising company, used this story as an opportunity to reach out to advertisers. CEO Ted Murphy left a comment on WickedFire saying “This is my first time here, I found out about this forum through the TechCrunch post. I wanted to offer up an opportunity for anyone of you to try SocialSpark CPC and put our click validation to the test. We will provide a $100 credit to any new advertiser. Drop a line to ashley@izea.com if you would like to take a spin on us.”

That didn’t go over so well with members. One person suggested Murphy review the forum’s rules (linking to a pornographic image) and another said “you are unwelcome here.” Sounds like a normal day at the office for Izea.

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Izea’s paid shilling scheme first launched in 2006 and has evolved from there. But the essence of it is the same: people get paid to shill products on their blogs (and now Twitter). It’s pollution.

Disclosure of the conflict of interest became mandatory for people shilling products in late 2006. But that disclosure is often muddled. For example, people shilling on Twitter need only add “#spon” to the post to satisfy the disclosure requirements.

Most big brands have avoided Izea like the plague. FCC regulations on word of mouth advertising are becoming stricter over time, and Izea is on the front line of this nonsense.

But now brands may be sucked into Izea’s pay per post scheme whether they like it or not. WOMMA founder and spam fighter Andy Sernovitz noticed a number of well known brands, like USA Today, Home Shopping Network, Priceline, 1-800-Contacts, Carbonite and StubHub (owned by eBay) all recently had campaigns running on Izea’s SocialSpark site. It’s shocking that those brands would associate themselves with Izea, so he dug further. And it turns out that at least some of them (and probably all of them) had no idea they were listed as Izea advertisers.

Izea pulled them in through Commission Junction, an affiliate marketing company, via a program they are testing called the Izea Partner Network: “Izea works with third party affiliate and display networks to syndicate unique and exciting offers to the SocialSpark social media network. These opportunities are only CPC and CPA and are largely performance driven.”

The result? Brands like Home Shopping Network, who have no relationship with Izea, are spammed across Twitter and blogs with $0.13/click links.

All of these ads were quickly taken down. We’ve contacted a few for comment. Carbonite CEO David Friend wrote back “A CJ affiliate was using pay-per-post to try to sell Carbonite and a bunch of other products. This was apparent because the landing page had a Commission Junction cookie on it. We checked a few of the guy’s other “featured” companies and they all had the same sort of affiliate tracking code. Our affiliate manager contacted CJ and cut them off because we don’t allow pay-per-post schemes. An affiliate program requires constant policing because some of these guys will try almost anything and you just have to monitor it very carefully. We have a full time person on it.”

Commission Junction hasn’t responded to an inquiry yet. Izea CEO Ted Murphy responded with “Thanks for reaching out to me. I am a bit tied up. What type of questions do you have? Everything in test right now. Not much to it yet.”

Let’s just hope Commission Junction and other advertising networks put a stop to this test before other brands are hurt.

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“…while compensating bloggers was considered taboo a few years ago, there has been a paradigm shift in thinking over the last year…”

Really? Yeah, I guess that whole Google resetting the page rank of PayPerPost bloggers was all the way back in November 2007. I must have slipped into a coma and missed the “paradigm shift” since.

Each time I’ve gotten this email, I have written back something like, “I’m sorry, I still consider paying for coverage incredibly controversial and, for a reporter, unethical. Can you explain to me what has changed about this issue?” No response. Month or so passes, then I get the same email. I honestly don’t know if the emails are being sent to me for press consideration or as a nudge that I should sign up, because it’s just obliquely titled “suggestion” in the subject line.

So, let me address this publicly, to save the time of future Izea employees cutting and pasting the email and sending it to me again: There is no time during my life on planet earth or beyond that I will *ever* consider accepting payment for coverage. There is no circumstance or situation where I will respect a journalist who does, especially if the details of that conflict aren’t clearly disclosed. P.E.R.I.O.D.

The release backs up this assertion that it’s no longer taboo by touting Forrester Research as endorsing “compensated conversation” as a great addition to your PR and marketing strategy. The great test case? Kmart. Wow. I wouldn’t consider trading in my credibility for, say, a lifetime shopping spree at Bloomingdale’s, but it’s definitely not worth talking up the latest blue-light-specials. What’s more, I wonder how they’re measuring that “success” as I haven’t been hearing any great Kmart buzz of late…

I’ve always had massive respect for former Forrester analyst Charlene Li and current analyst Jeremiah Owyang and was shocked that the firm would endorse this. So I sent a note to  Owyang who quickly sought to put it in context and with good reason. According to Sean Corcoran, who authored the research note, Forrester said that this could work and could be OK, but with strict parameters including full disclosure of the items or services being received for free, and encouraging the bloggers to be negative if they had a negative experience. At no time, did Forrester suggest that it was no longer controversial and said that journalist-bloggers should never be considered in the “compensated conversation” mix. “We write for marketers and, like it or not, this isn’t going away,” Corcoran said. “Companies were thoroughly confused, and we want to show them how to do it the right way.”

Ok, fair enough. Reviewers are frequently sent free items with the understanding that they’ll write whatever they think. They also usually have to send the item back. I’d argue there’s a world of difference between that and cash payment that’s disclosed on another page of the blog.

Interestingly, Owyang tipped TechCrunch to the company in the first post we ever wrote on them saying he had “grave concerns” but that founder Ted Murphy was not “the devil.” More interesting, the post he wrote about it at the time, is no longer available on his site. He says he never pulls any post, and that it’s an old blog and a Web hosting problem. (I believe him.) He also notes that he wrote that in the early PayPerPost days when it was an undeniably shadier service with no disclosure rules.

As is clear from Forrester’s careful clarification, the problem with the thinking here– well, one of them– is that it lumps “bloggers” into one category. In reality, blogging is a tool that lots of professionals use, not really one profession. There are bloggers– like the ones at TechCrunch– who are independent journalists and then there are bloggers like Owyang who write about the industry and have smart things to say, but also get paid by clients. Then there are corporate bloggers or in-house employees who write about their companies’ news. It’s basically a more conversational press release and there’s nothing wrong with it, because you go to it realizing the company is going to put itself in the best light.

In each case these are professionals using a conversational tool to get across a given message. As long as we get what they do for a living, there’s no harm or foul. I appreciate the insight of an analyst, and more openness from reading blog posts written by companies like Google or Twitter.

Then, there’s the Izea concept: Sure it’s been tweaked to include vague disclosures, but as seen by how they positioned Forrester in this release, there’s just an underlying shadiness to the venture. Just go away. Or at least stop emailing me.

(For Michael’s endless rants on the subject, go here.)

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The aftermath in a nutshell: The campaign is now stopped, Google is embarrassed, apologizes and penalizes the Japanese site with a PageRank reduction.

Just a few hours after the Japanese version of the TechCrunch article went online Tuesday, Google Japan issued a half-baked, vague apology on the official Google Japan blog, basically saying the Japanese subsidiary was unaware of their own terms of service. The campaign was halted and Google Japan ordered their outside PR agency to remove all existing paid postings in question.

An email Google Japan sent out to bloggers asking for a comment states the following (the second half of the last sentence is a winner):

Our internal guidelines have been violated in two ways:
First, the blog posts were connected to Google (via the outside agency which we contracted), but failed to fully disclose that relationship. Our internal guidelines are committed to transparency, and this was not sufficiently transparent.

Second, we have strict rules against doing anything that would
artificially promote the ranking of our own sites — or even be
perceived as artificially promoting their ranking. Having outside
blogs write about our gadget and linking to our site may have had an
impact on our own ranking, which is not acceptable under our
guidelines.

At Google, we believe in being open and transparent with our users,
and do not condone these kinds of opaque communications. We would
like to apologize for this episode, and express our gratitude to the
community of users and bloggers who brought this to our attention so
that we could put a stop to it.

But the apologies obviously weren’t enough as Google has imposed a PageRank penalty upon itself, busting down the rank from 9 to 5 (Google.com has a PageRank of 10, while TechCrunch still stands at 8). Matt Cutts, head of Google’s anti web spam team, tweeted that he expects Google Japan’s lower rank to remain as is for a while.

Considering that Google stopped the campaign after a little more than 24 hours, the funding was openly acknowledged in the posts and apologies were issued, the self punishment may appear a bit too harsh at first sight. But Google is actually just replicating a punishment strategy it pursued against other sites that violated company policies in the past (Google Japan’s PageRank hasn’t been reset to zero, however).

I doubt Google will lose any significant search traffic in Japan in the process, but think the measure is better than no measure at all. It should be OK now anyway as the company has been heavily scoffed at in the last few days and will probably have to live with a damage to its image for a while. But it’s Google, after all, and worse things than this PR meltdown could have happened.

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Nielsen Japan reports that in October 2008, Yahoo Search saw a total of over 3.5 billion page views, while No. 2 Google trailed with 2.6 billion page views. According to a Comscore Japan ranking released in September 2008, Yahoo ruled the Japanese search engine market with a share of 51.2% (Google reached 39.0% in that month).

It’s not that Google isn’t trying. In recent months, the company rolled out a number of online ads, offline promotion campaigns and several Japan-only services (Picasa recently started offering QR codes for easy mobile access, for example). And today it came to light they are now paying bloggers to write nice things about Google – a marketing tool TechCrunch never really was a big fan of.

Here is the background:
On Thursday last week, Google Japan revamped the top page and included a new, Japan-only “Hot Keywords” section displaying the top 5 search terms currently googled in Japan (see screenshot below).

Users have been able to add a gadget containing the top 10 hot keywords to iGoogle for months and now can also integrate the list into their blogs as widgets. In its current form, Google Japan looks more like a portal site than any other version worldwide, a product strategy obviously aimed at disputing Yahoo’s standing.

But that didn’t seem to be enough, as the Japanese blogosphere today is filled with reports about Google hiring Cyberbuzz, a Tokyo-based Internet marketing company to promote the keyword feature (its widget version) with a pay-per-post campaign. And in fact, the search string “Google Hot Keywords Ranking+Blog Widget+CyberBuzz” in Japanese in Google’s own Blog Search leads to a few dozen results, indicating the reports aren’t made up of thin air. This blogger, for example, integrated the keyword widget and praises the list as being very useful to be kept up-to-date on what is going on in the world. This one says the keywords change every 20 minutes and that the new Google feature once quickly helped in obtaining information on a Japanese TV star. All postings end with a disclosure that says: “I am taking part in the Cyberbuzz campaign”.

It’s interesting to see that Google, a company that not too long ago radically took action against PayPerPost bloggers in the US, today thinks the concept is suitable as long as it helps them advance in Japan (even though in Japan, pay-per-post isn’t regarded nearly as obnoxious as in the US).

Google Japan’s new president Koichiro Tsujino last month suggested the company will, as Yahoo brilliantly did in the past, try to establish itself as a homegrown brand by putting a stronger emphasis on localized marketing and product strategies. But whatever Google has up its sleeves, pay-per-post campaigns surely are not enough to take over Japan from Yahoo.

Via Asiajin

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Advertisers pay on a cost-per-thousand-impression basis, and the ads are promised to be delivered to relevant audiences based on keywords. That means Be-A-Magpie will analyze the content of your Twitter messages to see if there is a match to particular advertisers.

The TechCrunch Twitter account, with 31,000 followers, can earn a whopping €14,410.51 per month, it says.

The service auto-determines the number of ads to insert per legitimate Twitter message – the default is one ad for every five Tweets. The service inserts the ads automatically by storing your Twitter credentials. As for disclosure – well, there really isn’t any. A #magpie hashtag is added to each Tweet, but that’s it.

It’s not clear if Twitter will object to this. Their terms and conditions don’t specifically exclude it, but an amendment may be in order. There is a good discussion here, started by Robert Scoble, on whether it should be banned.

Users may not be so forgiving though. I imagine anyone who starts to use this will see a sudden decline in followers rather quickly.

You can tell who’s already signed up for the service – the company is using those accounts to spread word about itself virally:

Update: Credit where it’s due: Ben Kessler appears to be the first to call PayPerPost on Be-A-Magpie.

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Social Spark brings the PayPerPost scheme into a candy colored social network. There’s little need to describe all the features as there’s nothing really innovative: think MySpace or Facebook but in bright colors. The key difference is the focus on shilling; center stage is offers for paid posting, including most popular offers and most recent. Each offer includes which members of PayPerPost/ SocialSpark recently visited it and posties can leave props for each offer.

One thing that did surprise me is that SocialSpark is also offering “sponsorship opportunities.” These would appear to be as they suggest, simple place a box on your site and get paid sponsorships that would be entirely legitimate and without moral qualms to most people.

The key difference to PayPerPost before it is that offers taken up in SocialSpark must include link=nofollow links, start with a disclosure, and should be neutral in tone: still shilling, but less evil.

The service is currently in closed alpha testing and running behind schedule (it was originally scheduled for a January launch) so perhaps this explains the complete lack of offers available on the site. Most of the paid opportunities come from IZEA itself and not third party advertisers.

SocialSpark isn’t my thing (nor Michael’s), but others may disagree. Screen shots as follows:

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According to CEO Ted Murphy, the service has been suspended due to “elevated levels of abuse on Zookoda.com” and goes on to explain that the service is being used by spammers. For those that think that PayPerPost pollutes the blogosphere with spam content, the following from Murphy is rich with irony:

We hate spam. Honestly, I don’t think I’ve ever met anyone that really enjoys spam. Some people hate spam even more than we hate spam and those people complained to our network hosting service. Our network hosting service REALLY hate spam….We’re not spammers, we don’t support spammers and we do support everybody’s freedom of choice when it comes to opting in and out email lists.

Murphy suggests that the service will return in January, but we’re putting it on deadpool watch; Zookoda has been failing for months. Most Searched reports that the service started deteriorating when IZEA took over and had gotten to the stage where it simply stopped sending out email distributions in early December. Erno H on LinkedIn reports similar problems. An email distribution service that doesn’t provide email distribution is a business with nothing going for it.

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PayPerpost, now called IZEA, is in the process of launching RealRank, an alternative way to rank blogs. But their advertisers are still looking for blogs with an actual PageRank to write about them (this helps with the SEO effort). The result? Freaked out PPP shills who are going to have to find a real job.

Bloggers are expressing their angst on forum thread. Among the more pathetic messages:

Oh. My. God. Oh my god! I can’t believe this is happening. I NEED to earn money with my blogs, I’m going to have to take every single opp I qualify for every day in order to keep up with expenses.

and this, from someone lamenting a negative comment on their blog (the second paragraph is a winner):

I’m trying to develop a thicker skin, I really am. But this is my livelihood, you know? This is important to me. When I started with PPP, I never thought I would still be doing it seven months later, or that I would care about it so much.

And since when is independence and paid blogging mutually exclusive? There is choice involved.

So much for the claims by PayPerPost that their bloggers only write about products they actually believe in. PayPerPost isn’t dead, but a big chunk of their advertisers are clearly bailing now that the SEO value of paid posts is gone. That’s bad news for the shill blogs that rely on PPP to pay the bills, but good for the blogosphere in general.

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In 2006 PayPerPost CEO Ted Murphy emailed to ask if we’d take their ads on TechCrunch. We said no and that was the end of it. Yesterday I heard from Ted again on the subject of advertising. His company, which has been renamed IZEA, wants to advertise their new RealRank service on TechCrunch.

For anyone unfamiliar with PayPerPost/IZEA and our position on them, it comes down to this: We think the core product is deeply flawed and we’ve said so many, many times. Over time the company has made policy changes that have mitigated some of the biggest issues we and others have with them. For example, they now require disclosure of paid posts, although we take issue with some of the language and the placement of the disclosure.

They are the blogging world’s pariah and are fairly routinely trashed for, as I put it, polluting the blogosphere. For more on our posts on them, see their Crunchbase profile. Here’s our first post on PayPerPost, which is representative of most of our coverage. If you have a spare couple of hours (and you’re tired of watching my sweet dancing moves), you can read all of our coverage of the company here.

Anyway, the company now has other products which we have no particular issue with (example), and RealRank, a new way to rank participating blogs since Google has basically kicked them out of the Internet, is one of them.

We’ve asked Ted if he minds us asking our readers what they think about taking advertising from IZEA on TechCrunch, and he’s agreed. So the question is, do we accept advertising from IZEA for RealRank? The poll is below. If you say it’s a bad idea, we won’t accept it (and Ted says he wouldn’t want to do it anyway since it wouldn’t be received well). If you say yes, we’ll take it.

Two quick additional points. First, yes I know that simply writing this post is a way of promoting PayPerPost. But we’re not linking to them here, and I’m pretty sure Ted isn’t super pleased with all the links to the negative posts we’ve written. Second, it should go without saying that even if we accept their advertising, it isn’t going to affect our editorial coverage of the company. In fact, I may go more negative just to prove we’re neutral, if that makes sense.

What’s your opinion? The poll will remain open for around 24 hours, and we’ll update with the final vote. If you’re wondering how I’m voting on this – well, the very first vote is a “no.” :-/

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IZEA (the new holding company for PayPerPost) CEO Ted Murphy is not surprisingly calling foul on the move, claiming that it’s part of some sort of censorship conspiracy by Google. Better still Murphy claims that it’s part of Google’s attempts to deny competition because PayPerPost is a “a very attractive alternative” to Adsense.

Murphy goes on to claim that TechCrunch should be punished because our occasional posts thanking sponsors (like this one) is nothing different to what PayPerPost bloggers do.

WTF?

TechCrunch, like many blogs occasionally puts up a post (usually monthly) highlighting our great sponsors, but lets look at one of these posts. They nearly always include the words “TechCrunch Sponsors” in the post title, and are very clear that its TechCrunch thanking our sponsors (”Thanks TechCrunch Sponsors”). There is zero editorial on the benefits for or against the sponsors such as PayPerPost, and it’s clear what the post is about, unlike your typical PayPerPost blog post. We also don’t take money for writing editorial content; TechCrunch publishes posts for and against without favor, where as your typical PayPerPost blog distorts the line between truth and paid advertorial.

Unlike Michael I’ve never been as strong in my dislike of PayPerPost, and although I’ve never used the service myself (I did sign up for an account when they opened so I could review the service) I’m all for exploring different ways for the little guy to make money, even if personally the ethics and morality of PayPerPost has never sat well with me. Yet if PayPerPost ever wanted friends, wild conspiracy centered posts such as this one just say “mad” to me. This looks and smells like a company that is not in a good way, a company that is lashing out as its business model starts to fail around it. I’m predicting Deadpool within 12 months; I can’t see a lot of bloggers being happy with losing Pagerank so we should see an exodus of bloggers out of PayPerPost (particularly ones with traffic) over the next few months. This will leave PayPerPost with inventory deficiencies that will result in diminished revenues making the PayPerPost business model unsustainable going forward.

thanks to Trace for the tip

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Bloggers and advertisers (the company says they have over 85,000 bloggers and 11,000 advertisers) will create profiles. Users visiting the site will then “browse the public profiles of advertisers and bloggers along with their associated sponsorship and blog related data.”

”It’s the first social network that is designed from the ground up to be advertiser-centric, while preserving the free, managed flow of user information common within other networks” said CEO Ted Murphy.

The translation, as far as I can tell, is that SocialSpark is a place for advertisers to interact with bloggers who are willing to take pay per post type advertising and run with it. Get to know them, see how big their audience is, whatever. There’s absolutely nothing distasteful about it as an idea. But to the extent it furthers the pollution of the blogosphere by encouraging more paid shilling, it makes us all worse off.

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Like the popular site TinyURL, URLbrief lets people exchange a long, difficult to communicate URL for a short one. They’ve added a couple of bells and whistles – The URL creator can link to multiple destination URLs and visitors are taken to one of the links randomly when they click. Also, users can see stats on how many clicks the link is getting and browser data on the people clicking.

The service seems completely unrelated to the main business of PayPerPost, which pays bloggers to write posts about advertisers.

But…and I’m thinking out loud here: Those posts always include links back to the advertiser, so perhaps they will use URLbrief to direct that traffic. This seems counter intuitive, since advertisers want the links to go directly to them. But rumor has it that Google has been trying to find ways to penalize PPP blogger links. Perhaps this is a way to minimize any collateral search engine damage from direct links. The stats feature of URLbrief also provides good, verifiable data back to PPP as to how many people click the links, which may help them monetize advertisers more effectively.

Who knows. No conspiracy theory is too outlandish when it comes to this company. All I know is, they’re up to something, I’m sure. There are way too many services out there just like this, and there is absolutely no revenue model around this service. Their blog post on the new product is here.

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A couple of weeks ago we wrote about how CEO Ted Murphy took all employees on an all-expenses-paid offside to Club Med, where they got drunk, inexplicably dressed up as Native Americans (complete with red face paint) and then posted video of the whole racially offensive episode on the web.

Now this: Today we were sent an ongoing email string between PayPerPost and an engineer, Lawrence Salberg, who was steered towards the company by a headhunter. After an underwhelming interview the candidate did some research and wrote back to the headhunter that he was not interested in the job, and in fact that he was so upset that he wasted his time that he didn’t want to hear about any of the headhunter’s other opportunities, either. “Remove me from your candidacy system immediately,” Salberg said in a long email outlining the reasons he would not work at the company.

That should have been the end of it. But the headhunter forwarded Salberg’s email to PayPerPost VP Software Development Peter Wright (Update: See here), who went on the attack. “I’m shocked at some of the statements in your email to Lori” Wright said in an unsolicited email to Salberg. Other gems aimed at the job candidate:

• As for this company having no future, have you done ANY research at all?
• First you say that the only people that would work at such a company are those with no brains, no self confidence, etc etc. I take offense at that.
• The thing that amuses me most about your post though is how easily you are swayed by loud noises.
• I wish you the very best of luck in your search for a “career.”
• I know there are lots of safe little environments out there with well structured corporate ladders that you can happily spend your days climbing and climbing until eventually you retire.

Wright also spends time boasting about his own accomplishments, saying:

I’m a best selling author. I wrote the world’s best selling VIsual Basic book (and 13 others) and had a very happy career as a consultant specializing in Microsoft technologies that took me all over the world.

And so on (the entire string is available here as a pdf – it includes a number of attacks on TechCrunch as well). Wright defends the abilities of his team and technical management, which have previously been criticized as lax and unprofessional.

It’s never professional to go on the attack when someone declines your job offer. With a company as controversial as PayPerPost, there’s also a good chance the embarrassment will be forwarded to the press. The lesson here – be very careful before you take a job at this company, and if you decline, don’t even think about giving your honest opinion. And if you’re a startup looking for a smart engineer, Lawrence Salberg is still on the market.

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The company has been chronicling their startup days on a video blog called RockStartup. There have been some embarrassments before with the video blog – such as when a viewer noticed that the company had purchased $700 chairs for employees with investor capital and then yelled at a painter for standing on one (CEO Ted Murphy, pictured above, later said the chairs were purchased used).

But the most recent episode is where the company really takes the cake. All employees of the company were taken on an all-expenses-paid trip to Club Med, where as far as I can tell they spent their time getting drunk and dressing up as Native Americans, complete with lots of red face and body paint (something many Native Americans find both racist and offensive, and which has been equated to Blackface). The company also hired something called a “Creative Thinking Coach” to guide them through the whole experience.

The only question I have is…Did Draper Fisher Jurvetson, the main VC behind PayPerPost, really greenlight this debacle?

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BegForPost promises none of the ethical hassles of PayPerPost. There’s no payment, just begging for coverage:

You’ve worked for months building a startup on a boostrap budget and the launch is near. How will you get an initial influx of traffic to propel your product/service into viral bliss? Don’t pay off bloggers to promote your startup, beg! Getting started is quick and easy. Fill out the form below, sit back, and wait for Internet stardom. You’re almost there!

* Completely free
* No chicken hats
* No conflicts of interest
* No annoying reality show
* No direct deployments to production
* No premature acquisition announcements

The first “begger” is Sparkmeter a “tool to help cut through the ‘08 election news.” They requesting a review on TechCrunch. Nice.

Our previous PayPerPost coverage is here. I expect a cease & desist letter from PPP to BFP to be arriving momentarily.

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The Blog Herald got a good first look, and notes that it differs only in the details from the other services. Disclosure is required. Bloggers can choose to write a positive or negative review. And, in a business model change, it looks like bloggers can set their price (PayPerPost lets advertisers set the price, and ReviewMe sets the price automatically based on how popular the blog is).

Unlike the others, SponsoredReviews gets right to the point on their home page. While none of the other sites will admit that search engine rankings is a big part of these scams, SponsoredReviews lists it right on their home page as a benefit to advertisers. At the end of the day, these advertisers won’t care all that much what exactly these blogs say, as long as they are linking back to their product. This is something I couldn’t get PayPerPost to quite admit in my podcast interview with them late last year.

So the third party costs are becoming pretty clear: misled readers, search engine pollution and credibility questions around the entire blogosphere. All for a few dollars a post.

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In a post on the PayPerPost blog today, the company said “We…dug into the Metrics platform and regretfully found that it wasn’t what we were looking for right now.” That came just a week after the official announcement of the acquisition.

Generally speaking, responsible companies “dig into” the acquisition target before they announce a deal.

Whatever happened, this isn’t pretty. After the deal was announced, Performancing moved their non-acquired assets to a new domain name and re-launched that service. They certainly stopped talking to other potential acquirors, given that the deal was officially announced. In merger-land, this is what’s known as “being left at the altar” because everyone down the road who you talk to will want to know why the previous deal exploded.

Performancing should have had a more nailed down acquisition agreement, so they aren’t entirely blameless. But PayPerPost is becoming an increasingly ridiculous startup, and a black eye for investor Draper Fisher Jurvetson.

Our previous coverage of PayPerPost is here.

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The main purpose of the acquisition appears to be for PayPerPost to get access to the 28,000 Performancing users, most of whom are bloggers and potential customers of PayPerPost. The popular Performancing Firefox blog editing plugin is not being acquired, and will be spun off into a new brand.

Our previous coverage of PayPerPost is here.

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We are working to obtain the opinion to see how this might affect the PayPerPost business. This might force their hand and require their bloggers to disclose when they promote products for a fee.

Our previous PPP coverage is here.

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ReviewMe has a somewhat different model that PayPerPost. Where advertisers on PayPerPost set a single fee that is paid to all bloggers regardless of their size, ReviewMe uses an algorithm based on Alexa, Technorati and other statistics to determine the importance of a blog and charges a different fee for each blog based on the calculation. Blogger payments range from $30 – $1,000 per post.

Also, Bloggers must disclose that the review is a paid advertisement. They can do this in anyway they choose, ie “The following is a paid review:” “Paid Advertisement:” etc. This is another improvement over PayPerPost, which is heavily criticized because it does not require disclosure.

Finally, advertisers can purchase posts, but they cannot require that a post is positive. The blogger can choose to write their honest opinion without fear of not being paid. The only requirement is that the review must be a minimum of 200 words.

In an email exchange, a company spokesperson said “We are planning on burying PayPerPost.” While we do not endorse this business model, we do note that ReviewMe has removed the most egregious aspects of the PayPerPost business model: no disclosure requirement, and a requirement to write a positive post.

ReviewMe is eating their own dog food by giving away $25,000 today to pay bloggers to write about the service.

In related news, see Steve Rubel on a new startup called LoudLaunch. As I said before, this pay-to-shill business model is spreading like a virus.

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Don’t look for PayPerPost to require blogger disclosure anytime soon. Instead, they are creating a distraction, designed to keep the buzz about PayPerPost going strong, as well as to move people’s attention away from the core issue of blogger disclosure of product shilling.

In a move reminiscent of big tobacco funding tobacco research, PayPerPost is announcing a new initiative on Monday called DisclosurePolicy, which “provides policy creation tools, best practices and forums for discussing the delicate balance between content creator freedoms and audience transparency expectations.”

DisclosurePolicy creates a disclosure policy for bloggers to post on their blogs, based on their answers to a few questions. They will also pay every blogger who posts a PayPerPost disclosure policy on their blog $10.

While that sounds like a fine idea, PayPerPost bloggers should also be disclosing the fact that they are being paid for their post prominently within the post, not on some separate page in their blog. Also PayPerPost subtly works with the language they use, particularly around the definition of “compensation” to suggest that all blogs have bias (and therefore PayPerPost isn’t really that bad). Here are the three choices – bloggers must choose one:

This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

This blog does not accept any form of cash advertising, sponsorship, or paid topic insertions. However, we will and do accept and keep free products, services, travel, event tickets, and other forms of compensation from companies and organizations.

This blog accepts forms of cash advertising, sponsorship, paid insertions or other forms of compensation.

If you are a PayPerPost blogger, or the New York Times, or anything in between, you must pick the third option. That’s because “taking advertsing” and “paid insertions” are defined as the same thing. And even if you have no form of advertising or other revenue on the site, you have to admit to bias based on “background, occupation, religion, political affiliation or experience.”

Blurring the lines in this way – facilitating the pollution of the blogosphere while creating an illusion of doing something good for the public, is a good business move for PayPerPost. But it is a terrible development for the blogsphere and public trust. I hope that very few bloggers are suckered into going along with this.

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The PayPerPost model brings up memories of payola in the music industry, something the FCC and state attorney generals are still trying to eliminate or control. Given the distributed and unlicensed nature of the blogosphere, controlling payoffs to bloggers will be exponentially more difficult.

Our position on these pay-to-shill services is clear: they are a natural result of the growth in size and influence of the blogosphere, but they undermine the credibility of the entire ecosystem and mislead readers.

ReviewMe is backed by Text Link Ads, a long time TechCrunch sponsor. It has not launched yet but was announced earlier today. Like PayPerPost, ReviewMe is a marketplace that allows advertisers to pay bloggers to write about their products. There are some significant differences in the business model, though. Where advertisers on PayPerPost set a single fee that is paid to all bloggers regardless of their size, ReviewMe uses an algorithm based on Alexa, Technorati and other statistics to determine the importance of a blog and charges a different fee for each blog based on the calculation. To their credit, ReviewMe requires bloggers to disclose that they are being paid for the post, and advertisers cannot require a positive post (PayPerPost makes disclosure optional and advertisers can require positive posts).

While we applaud the fact that ReviewMe requires disclosure and prohibits advertisers from requiring a positive post, we still think the very act of paying bloggers to write about a product is a very bad idea. Frankly, we’re not happy that one of our sponsors has launched this type of service, and we’ve notified them that we will not allow promotion of ReviewMe through TechCrunch.

CreamAid launched earlier this week. The service is similar to PayPerPost but requires bloggers to include a Flash widget in the post that links to CreamAid and also shows other blog posts that have discussed the product. There does not seem to be a requirement that bloggers write positively about a product, but there are few details on the site. Part of the goal of CreamAid seems to be to build a social network around paid posts using this widget.

My hope is that PayPerPost quickly requires disclosure by bloggers and eliminates the ability for advertisers to require positive reviews. It’s clear that simply stating we don’t like these services isn’t going to make them go away. VCs are now involved and PayPerPost has a large number of bloggers on their payroll that are willing to attack anyone that says it’s a bad idea. Given the very low likelihood of government involvement similar to the effort to eliminate payola in the radio industry, I’m not really sure what can be done to reverse the trend. In the end, individual bloggers will have to establish and maintain their own credibility.

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The service is a marketplace for advertisers to pay bloggers to write about products for a fee. Commenters to our original post were polarized into those violently for and those againt the product. The key area of controversy is the fact that advertisers can mandate that posts be positive on the product, and disclosure of payment is optional for the blogger (screen shot at end of post shows sample available writing opportunities).

The controversy didn’t stop venture capitalists from quickly jumping on board, though. On Tuesday PayPerPost will announce a $3 million round of financing led by Inflexion Partners and with participation from Villiage Ventures and Draper Fisher Jurvetson. Dan Rua from Inflexion and Michael Barach from Villiage Ventures will take board seats. Josh Stein from Draper Fisher Jurvetson will become a board observer.

Rob Hof from BusinessWeek and I spoke to founder Ted Murphy and DFJ’s Josh Stein earlier today about the financing and the product in general. The conversation is available as a podcast at TalkCrunch. Rob’s post on the news tonight is here.

Ted says his business is doing quite well in spite of (or possibly due to) all of the controversy raised by paying off bloggers to write about certain products. And Josh Stein at DFJ seems excited about the potential profitability of the company while downplaying the ethical issues raised by this and other blogs – the market will sort things out, he says.

Some back of the envelope calculations based on numbers Ted disclosed in the podcast suggest that revenues after the first few months of operations have topped $100,000.

Podcast Interview with founder Ted Murphy and VC Josh Stein is here.

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